Sales and Use Tax Annotations

Annotation 375.0885.700

(b) ON AND AFTER SEPTEMBER 22, 1988

(1) Generally

375.0885.700 Motion Picture Trailers. A company produces two types of end products: (1) a master tape of the film trailer which is sometimes produced on motion picture film rather than videotape. The trailers are produced by editing portions from an original movie film. The company understands that tax does not apply to its charge for the initial master tape or motion picture trailer it provides to the client; and (2) duplicate copies of the trailer.

The company may purchase the raw stock under resale certificate. The trailers produced by the company qualify as "qualified motion pictures." The company is the consumer of the motion picture film and videotape it uses to make the initial motion picture film or videotape trailer which is transferred to its clients. Tax does not apply to the company's transfer of that initial trailer to its customer. The duplicate copies of the motion picture film or videotape trailers which the company produces are "release prints or tapes for exhibition or broadcast." The company's sales of such release prints or tapes for exhibition or broadcast are subject to sales tax on the entire gross receipts of the sale. Since the company makes sales of products on both motion picture film and videotapes, the company may properly issue a resale certificate to its vendors when purchasing either of such raw stock. The company should not issue a resale certificate when purchasing other supplies and materials which will be consumed in making the trailers. 4/27/89.